UNITY TECHNOLOGIES

Three developers in Copenhagen — David Helgason, Joachim Ante, and Nicholas Francis — wanted to make a game but realized the tools were terrible. So they built a game engine instead.

Unity launched in 2005 with a focus on making game development accessible to indie developers and small studios. While Unreal Engine targeted AAA studios, Unity targeted everyone else.

The bet on democratization worked. By 2020, Unity powered more games than any other engine on earth and went public on the NYSE at a $13.7 billion valuation.

Unity is a game engine and development platform. Developers use it to build games, and Unity monetizes through subscriptions (Unity Pro/Enterprise), advertising (Unity Ads — one of the largest mobile ad networks), and a growing suite of tools for non-gaming industries like architecture, automotive, and film.

About 70% of the top 1,000 mobile games were made with Unity. Revenue was $2.2 billion in 2022.

The company went public in 2020 and was valued at over $50 billion at its peak before a catastrophic pricing controversy destroyed its reputation with developers.

Unity Engine (real-time 3D development platform), Unity Ads (mobile advertising network), Unity Gaming Services (backend for multiplayer games), Unity Muse (AI-assisted development), Unity Industry (enterprise solutions for automotive, architecture, film)

Land and expand in non-gaming industries. Unity has pushed hard into automotive (car configurators), architecture (real-time 3D visualization), film (virtual production), and digital twins (industrial simulations).

The idea is that real-time 3D rendering will be needed everywhere, not just games. Unity also acquired ironSource for $4.4 billion in 2022 to dominate mobile game advertising and monetization.

The Runtime Fee disaster. In September 2023, Unity announced a new pricing model that would charge developers a fee every time a game built with Unity was installed.

The backlash was nuclear. Developers threatened to switch engines.

Some sent death threats to Unity offices. The stock crashed.

CEO John Riccitiello resigned. Unity reversed the policy within weeks, but the damage to developer trust was severe and potentially permanent.

The episode proved that a platform's relationship with its developers is its most valuable — and most fragile — asset.

Silver Lake, Sequoia Capital, DFJ Growth, Canada Pension Plan, Singapore GIC